ABI: Set-Top Vendors Caught in Middle

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Set-top vendors are caught in the squeeze between adding new features to their boxes and keeping their costs down, research firm Allied Business Intelligence Inc. said.

Further adding to manufacturers’ problems, the cost of components and manufacturing is not decreasing at the same speed as the increasing expectation levels of the cable MSOs, ABI added.

The researcher believes high-end set-tops will continue to increase their market penetration and cannibalize shipments of low-end boxes due to relatively enthusiastic consumer demand for features such as personal video recorders, HDTV and home networking.

In other ABI findings:

• Scientific-Atlanta Inc. is emerging as the leader in PVR offerings, with Motorola Inc. a distant second.

• North American HD-only set-tops and satellite receivers will double in shipments, from 460,000 to 920,000 in 2004. Their shipment numbers will then start to erode once digital-video-recorder/HD-enabled boxes reach the mass market in late 2004 and mid-2005.

• The recent agreement between the National Telecommunications Cooperative Association and the Consumer Electronics Association regarding digital-cable interoperability and set-top retail strategy will commoditize the market for low-end boxes.

• Worldwide digital-cable HD-PVR set-top shipments will overtake annual HD-box shipments in 2005 and annual PVR set-top shipments in 2007.

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